Palo Alto acquisition of Protect AI cheered by analysts
Published: 16:06 28 Apr 2025 EDT
Palo Alto Networks Inc (NYSE:PANW, ETR:5AP)’s acquisition of Protect AI is set to strengthen the company’s position as the cyber platform of choice, analysts at Jefferies believe.
Palo Alto announced a definitive agreement to acquire the AI and machine learning app and model security firm on Monday.
The terms of the deal were not disclosed, but expectations of a $650 million to $700 million purchase price were reported in early April.
“This deal continues Palo Alto's strategy of buying best-of-breed technology in the past few years,” Jefferies analysts wrote.
“Protect AI's platform offers solutions like advanced AI scanning, LLM security, and Gen AI red teaming. It provides visibility, remediation, control, and governance, safeguarding AI/machine learning systems from security threats and risks.”
They noted that Palo Alto plans to leverage Protect AI's talent and technology to accelerate its newly announced Prisma AIRS, an AI security platform that includes capabilities like AI model scanning, posture management, AI red teaming, runtime security, and AI agent security.
“Prisma AIRS can be leveraged to protect AI apps, agents, models, and data, with Palo Alto describing it as security for the entire enterprise AI ecosystem,” analysts wrote.
AI a 'must-win'
They view AI as a “must-win” category for Palo Alto, similar to Cloud where only three pure plays ultimately won, namely CrowdStrike, Palo Alto and recently acquired Wiz.
“While securing AI will likely take time to accrete to the top-line growth, it remains the next frontier of growth and represents a category Palo Alto must win, or at least finish top three in,” they wrote.
“We expect continued investment and M&A in the space as large platforms try to prevent the next ‘Wiz for AI’ from emerging and taking share.”
Jefferies has a ‘Buy’ rating on Palo Alto and $215 price target, representing upside of 20% at their time of writing.
Shares of Palo Alto traded up 1.6% at $181 shortly before Monday’s closing bell.
